Budget woes, legal battle

2013 finances, lawsuit loom over county

MANISTIQUE – The Schoolcraft County budget will have to be trimmed even more in 2013, this according to county commissioners. The reduction was discussed following an audit presentation from the county’s accounting firm, Anderson, Tackman and Company, LLC, during a recent audit-finance committee meeting.

According to Alan Stotz, CPA with Anderson, Tackman and Company, the county’s audit was “clean”.

“Everybody’s talking about the emergency financial manager situations that occur – now you actually have about 21 percent of your general fund budget in fund balance at the present time,” he said. “We do have a fund balance that’s been at a level that we haven’t seen in quite some time in the county.”

However, Stotz noted that the appearance of the fund balance is misleading, since a nearly $500,000 forgiven debt now appears as a positive number in the general fund – but does not actually exist. While the money will remain phantom funds, he added it could build equity for the county in the future. For now, Stotz suggested the commissioners continue to look past this money to see their actual general fund balance of around $356,000.

“As a whole, the county didn’t get any richer,” he explained.

One point of concern Stotz did uncover during the county’s audit was retirement plan funding.

“If you take a look at the calculation there, it looks like we’re unfunded by $6.7 million,” he said. “The economy, the market, still hasn’t recovered well enough to fix these issues. This is something I go over at virtual every board meeting I talk to … most of them are facing escalating pension costs because there is not enough dollars to cover what the projected benefits are going to be.”

According to Commissioner Dan LaFoille, this issue of retirement funding is something the county has been grappling with since changes were made on a state level.

“We’re facing a big worry here, because of the state and their new retirement laws,” explained LaFoille. “Which is going to change the model for retirement for us for new employees … those new employees aren’t going to be paying into the same fund or at the same rate.

We could, in fact, see a worsening in our situation because of that,” he continued. “Long term, we do better, but in the short term, we have less people putting in to the current system.”

The issues with retirement plan funding, combined with the general state of the county and economy, are forcing the county to look, once again, at the possibility of making cuts.

“It’s suggested that we will, during the month of May, disperse to all department heads, the budget worksheet for 2013, along with a note of request for a 10 percent reduction by department,” said LaFoille.

Commissioner Al Grimm offered an explanation for the request.

“This is one approach we’re going to use before we look at possibly any more layoffs,” he said. “We’re going to leave it up to department heads to figure out how they can do it … hopefully this will work.”

In other business, the commissioners entered into an executive session to discuss the pending Pawley/Fiegel lawsuit. The lawsuit alleges the county engaged in age discrimination in 2009 while deciding to hire current Public Transit Director John Stapleton. Robert Fiegel and Cindy Pawley had been applicants and interviewed for the position with public transit, but allegedly denied due to their ages. Pawley filed a complaint with the Michigan Department of Civil Rights, and in the fall of 2011, the MDCR proposed the county pay a cash settlement of $20,000 for Pawley and $10,000 for Fiegel.

The county responded by voting that they would not be willing to pay the proposed settlement. Commissioners echoed this stance during the recent audit-finance meeting, and voted unanimously to not offer any settlement in the case.

“We thought that they were getting ready to drop the whole issue, but that didn’t happen, for whatever reason,” LaFoille stated in a phone interview Tuesday. “We don’t believe we did anything wrong in the first place.”

According to LaFoille, the board has remained firm on their stance, but did, at one point, agree to participate in anti-discrimination training.

“This was not an admission of guilt, and not based on any settlement,” he said. “We had thought about doing something like this before, just to be better versed.”

While the outcome of the lawsuit remains in the hands MDCR and its complainants, LaFoille noted that the board feels they made the right choice.